Archive for the ‘SR&ED’ Category

Before building a SR&ED and government funding consultation business, Sol Algranti, President and CEO of Northbridge Consultants, worked in the manufacturing industry for many years.

After finishing education in a high school for skilled trades, Sol began working in a large plastics manufacturing company where he gained practical knowledge of various plastic processes including injection moulding, blow moulding, extrusion and co-extrusion. He completed his Bachelor’s degree in Mechanical Engineering while working for an optical glass manufacturer, where he developed improved processes and designed pneumatically-controlled machines. After completing his Master’s degree in Systems Engineering, Sol worked as the Chief of Planning/Scheduling in a large plastic pipe manufacturing company and started a metallurgy business, providing metal heat treatment services to manufacturing companies.

Sol applied his expertise to improve manufacturing methods, and to reduce costs as the process engineer for Westbend of Canada in Barrie, Ontario. Thereafter, Sol’s expertise in plastics earned him the position of Advanced Manufacturing Engineer at Camco (Canadian Appliance Manufacturing Company), where he was responsible for all plastics processes and optimized operations in the large Hamilton, London and Montreal facilities during a major transition period. Sol then moved to a position at ABC group for MSB Plastics as the general manager for their struggling Toronto facility. Sol worked 6 days per week to optimize operations and within two to three months, he had transformed it into a profitable operation.

In 1989, Sol negotiated a leveraged buyout to acquire Shirlon Plastics, an established Cambridge-based manufacturer of plastics products with a niche in the Canadian Recreational Vehicle (RV) industry. Less than a year later, the 1990 recession began and the RV industry was one of the hardest hit sectors, forcing many RV manufacturers to go out of business. On the brink of bankruptcy, Sol worked relentlessly to expand his market base to the United States, and took huge financial risk to invest in the diversification of his product line. His efforts paid off and enabled Shirlon to not only survive the recession but to thrive afterwards.

Sol expanded his business through a diversification into gardening products, and through the acquisition of several companies including a large vacuum forming and sheet extrusion company, a plastics rotational moulding business, and a custom mould manufacturer. He relied on intensive R&D to improve his product line, to increase market share, and to remain competitive, he began claiming for SR&ED tax credits. The funding he received from the SR&ED program was reinvested into the development of new products and new technologies. By 2007, Sol had 6 manufacturing companies in plastic products and tooling industries and continues today to be involved in manufacturing through his remaining plastics company, investments, and consulting practice.

Sol’s profound background in research and development in the manufacturing sector has provided Northbridge with a strong foundation in the SR&ED program. Moreover, Sol’s manufacturing heritage gives NorthBridge a unique understanding of the risks that manufacturers take when they invest in R&D and the overall challenges that manufacturing businesses face when trying to grow and remain competitive.

When it comes to intellectual property (IP) and Scientific Research and Experimental Development (SR&ED) tax credits, CFOs must constantly assess the value of the services that they receive in exchange for engagement fees. Making this assessment can be challenging to the point of frustrating. CFOs must keep the bigger picture of overall financial health of their organization, while dealing with a complex management regime consisting of CTOs and CMOs. Further challenges arise due to complex and opaque billing practices by law firms and SR&ED consultation firms.

Agenda for SR&ED:

Basic overview

Tracking experimentation for CRA compliance

Labour tracking for CRA compliance

Integrating SR&ED intro tracking systems

Setting up a strategy

Agenda for Intellectual Property:

Basic overview of IP regimes

Identifying points of differences in your business

Selecting an appropriate IP regime that provides a barrier to entry for those points of difference

Learn how Hobart has utilized the Lighting Retrofit Rebate and their expected year over year savings

Making SR&ED a part of your workday

Plant Tour/Best Practice Walk (9:45 – 10:30)

Safety Shoes, Safety Glasses, Hearing protection

Integrating Multiple Demographic Groups (10:30 – 12:30)Are you struggling to integrate different demographic groups in your workplace?How do you build a bridge between the 20-somethings and the 40-somethings?–Is it even necessary?Have you come to realize that a person’s challenges outside work are NOT left at the door?–How do you propose to accommodate them?

Mike will share examples of the struggles Hobart is facing in hiring & integrating demographic groups.

Please arrive prepared to share and discuss any policies and procedures which you feel are starting to show fruition or have utterly failed.

Reminder to Members: Please visit your home consortium page on EMC’s website for more information on upcoming events, online SIG registrations and more!If you are a member, come out to our next local event to meet your neighbors again. If you are not yet involved, get in touch…the manufacturers down the street want to meet you, and so do we.

With the process of implementing a ‘patent box’ system ongoing in Quebec, much attention has been given recently to such a system across Canada to address our innovation gap—despite possessing one of the highest rates for R&D tax credits, Canada is lagging behind other leading developed countries when it comes to introducing innovation.

A patent box system is intended to foster the commercialization of intellectual property by reducing the percentage of tax applied to profits resulting from patented innovations. In contrast to SR&ED tax credits, which target the front end of the innovation lifecycle, a patent box regime targets commercialization, the last stage of the lifecycle. Therefore a patent box has the potential to mesh well with the SR&ED program to promote the entire R&D process.

The federal implementation of a patent box, however, would be neither straightforward nor cheap. The development of a robust framework would be required to determine the validity of claims and criteria for eligibility.

Many patent box systems have been introduced in developed countries within the last decade, especially in Europe. The UK program, for example, began in 2013 and reduces corporate tax on profit broadly related to the invention, from 22% to 10%. The Netherlands has had an innovation box system since 2007, which now encompasses a similarly broad range of IP, with a tax rate reduced from 25% to 5%.

Beginning in 2017, Quebec’s “innovative companies deduction” will allow revenue from innovation developed in the province to be taxed at 4% rather than 11.8%. The limitations to eligibility are an effort to keep the benefits of the tax reductions to companies based in Quebec. Other provinces, such as Saskatchewan, could be following suit soon.

While it is currently unknown when, or if, a Canada-wide patent box system is forthcoming, one thing that remains certain is that the debate on the need, benefit, and cost of the program will continue. NorthBridge Consultants is dedicated to bringing you the most recent news and updates on various federal and provincial programs and will continue to provide updates on the topic of patent boxes as they become available.

In August 2016, the Canada Revenue Agency (CRA) began to launch the Pre-Claim Review pilot program in order to review and determine whether R&D projects that are in progress qualify for the Scientific Research and Experimental Development (SR&ED) tax credit program.

This follows the cancellation of the similar Pre-Claim Project Review service at the end of June 2016, which had provided preliminary verbal opinions regarding the SR&ED eligibility of the proposed or initiated projects.

The new free review program aims to provide certainty that eligible R&D projects will be accepted as filed while they are still in progress, when it is easier to defend the projects and before the formal claim is prepared at the end of the fiscal year. After acceptance into the pilot program, the CRA would conduct a review to evaluate the SR&ED eligibility of the scientific or technological knowledge base as well as the work being performed.

A limited number of participants will be selected as the pilot program is implemented in August, October, or November, depending on the province or territory—see the table below for more details. There are a few criteria to be met, such as having previously filed for SR&ED while meeting the basic requirements for claiming SR&ED tax incentives.

The launch of the new review service also follows the recent launch of the Pre-Claim Consultation service, which assists potential claimants in determining whether their work is eligible for SR&ED tax credits and what supporting documents they should keep before they submit a claim. These two programs are intended to increase the predictability and consistency of the SR&ED program by the CRA.